Bahrain to have new risk guidelines
The Central Bank of Bahrain is creating new requirements for Islamic banks to measure and report their exposure to financial risk. The measure is part of the kingdom’s efforts to standardize Islamic banking and position the country as the Islamic banking capital of the Middle East. The central bank is expected to publish a consultation on a proposed risk assessment framework for Islamic banks in the first quarter of 2018, and the final set of regulations in the second half of the year. The regulations will require banks to have proper reserves – be it profit equalisation reserves or investment risk reserves, and we would like these new rules to set proper standards across the banks in managing unrestricted investment accounts. Bahrain is seeking to grow its Islamic finance sector in the years ahead based on a forecast of 5% annual growth rate in terms of Islamic banking assets over the next two years.